Understanding changes in the Accident & Health insurance market

Accident & Health underwriting requires experience, teamwork and dedicated practice. Changes in capacity caused by market withdrawals and the impact of the COVID-19 pandemic are shaping Accident & Health (A&H) market dynamics with a renewed focus on underwriting discipline.

Changing Capacity

Prior to COVID-19, there was a significant shift in the A&H market at Lloyd’s, with multiple syndicates withdrawing from A&H lines in the past year. Under its Decile 10 initiative, Lloyd’s homed in on unprofitable syndicates, which often offered under-priced products in order to build critical mass but were unable to emerge from that stage of the build-out.

Capacity in the Lloyd’s A&H market is shrinking. A prime example of this capacity squeeze is A&H cover for the professional sports market for traditional athletes. In addition to several carriers pulling out of the market completely, many remaining underwriters are adjusting their appetite for sports risk. The reduction in supply has led to price increases, tighter terms and conditions, and narrower coverage limits, with fewer multiyear deals.               

However, much like what happened in property lines post-9/11, we are starting to see new entrants and capital being deployed to the A&H sector as businesses seek to capitalise on the opportunities in a non-correlated, hardening market.

COVID-19 Pandemic

Since COVID-19, we have continued to see withdrawals from A&H lines in the London market. Contingency coverage and event cancellation capacities have also reduced, alongside A&H. That has blurred the boundaries between A&H and contingency ratings and where underwriters are looking to be more selective when it comes to certain risk exposures.

Underwriters are adjusting their line sizes with regards to more difficult risk exposures. There are fewer multiyear deals available, a sign of a firming market. Carriers are pushing back when presented with inadequately priced business and tightening terms and conditions.

Conversely, some markets are emerging as COVID-19 has forced a digital focus within insurance. Businesses are now facing a rapidly changing digital landscape, leading to new opportunities as risk protection evolves with society’s need to adapt to a new normal resulting from the pandemic. One example is esports; the industry had grown to surpass $1 billion in 2019. We've seen the emergence of esports accelerate during the pandemic as many professional sports turned to esports to stay connected with fans. In March alone, viewership on the popular video game streaming platform Twitch rose 23 percent to approximately 1.2 billion hours of video games watched. Professional sports turned to esports to keep fans engaged with players’ tournaments during the hiatus from live competition. The Virtual Grand Prix Series hit an enormous 30 million views across TV and digital platforms. The series enabled fans to continue watching Formula 1 races virtually during the ongoing COVID-19. Video gamers, meanwhile, were able to hold big tournaments virtually, without the risk of spreading infection.

Opportunity for A&H Carriers

With market changes, underwriting discipline has become increasingly vital. The insurance world is going to continue to change as the market hardens and we emerge from this pandemic.

One area of potential growth for the A&H market could be an increase in the awareness of available products, such as telehealth’s global expansion into the Direct and Facultative market. This also includes emerging markets such as products aligned with working from home or home-based business, and a potential redefining of Business Travel Accident as more employees work from home.

Despite challenging market conditions including a hardening market and changing working practices caused by COVID-19, AXIS is excited about the potential for the A&H market globally. AXIS was built to help our clients and partners navigate the challenges of a world filled with risk. We operate in chosen markets where we have expertise in complex risks. Going forward, we are taking a highly selective approach to risk, choosing lines within our appetite and have acceptable terms and conditions. We are focussed on balancing growing profits while satisfying new customer demand. We are committed to underwriting excellence, superior service and flexibility to adapt to new ideas and opportunities in A&H.

Authored by Guy Bonwick, Head of International Accident & Health Insurance, AXIS

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